Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210924 DOCKET: C68643

Lauwers, Coroza and Sossin JJ.A.

BETWEEN

Eric Muraven Applicant (Respondent)

and

Fay-Lynn Muraven Respondent (Appellant)

Counsel: Dani Z. Frodis, for the appellant Ryan M. Kniznik, for the respondent

Heard: September 2, 2021 by video conference

On appeal from the orders of Justice Mario D. Faieta of the Superior Court of Justice, dated June 29, 2020 and August 18, 2020.

Reasons for Decision

[1] The appellant, Fay-Lynn Muraven, and respondent, Eric Muraven, were married in 2003. They have two children. After thirteen years of marriage, the parties separated in 2016 after the respondent left the matrimonial home.

[2] In February 2020, the parties went to trial to determine various parenting and support issues. Shortly after the start of trial, the parties engaged a mediator and settled the parenting arrangements and ongoing support issues related to the children. The parties also agreed that the remaining financial issues would be determined by way of a motion for summary judgment to be decided by the trial judge.

[3] In reasons dated June 29, 2020, the trial judge decided a range of financial issues related to the parties’ incomes; retroactive child support owed by the respondent; retroactive s. 7 “special or extraordinary” expenses per the Federal Child Support Guidelines, SOR/97-175; and the equalization of net family property. Ultimately, the trial judge held that the respondent should pay the appellant an equalization payment of $67,327.51; retroactive child support in the amount of $30,427; and arrears of s. 7 expenses in the amount of $30,515.13. Additionally, the appellant owed the respondent a post-separation adjustment amount. The trial judge declined to order any prejudgment interest to be paid on the amounts owing to the appellant.

[4] The parties could not settle the final order of the trial judge. A further teleconference was held on July 23, 2020 to address several matters in respect of the June order. At this teleconference, the appellant sought to reopen the trial and asked the trial judge to reconsider his decisions on net family property, income for support purposes, and s. 7 expenses. All the arguments on these issues were dismissed by the trial judge in further reasons dated August 18, 2020.

[5] The appellant appeals the decision of the trial judge and raises three issues relating to (1) a date of marriage deduction; (2) the after-tax cost of the children’s parochial school; and (3) the trial judge’s refusal to grant prejudgment interest on the amounts owing by the respondent.

Date of Marriage Deduction

[6] The appellant argued before the trial judge that $80,000 in proceeds from the sale of inherited land should not form part of her net family property in calculating the equalization payment because, per s. 4(2) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), the property was acquired by gift or inheritance from a third person after the date of marriage. The appellant received $100,362.33 in February 2015, during marriage, as proceeds of sale of this inherited land. The trial judge rejected this submission and noted that the appellant had testified that these funds were the result of an inheritance she had received in 1991, years prior to the date of marriage. It was held in trust for her until it was sold during marriage. Therefore, because the property was “acquired” by inheritance by the appellant prior to the marriage, the trial judge reasoned that the proceeds did not qualify for exclusion under s. 4(2) of the FLA.

[7] The appellant raised an alternative “date of marriage deduction” argument with the trial judge during the July teleconference. The appellant argued that the land should be ascribed the value that she received after it was sold and deducted from her net family property. The trial judge noted that there was no evidence as to the property’s specific location, size, or value on the date of marriage and that he would not have approved reopening the trial to allow such additional evidence because the appellant could have advanced this alternative claim on the motion for summary judgment. Furthermore, the trial judge held that he was not prepared to guess the value of the property on the date of marriage. Accordingly, he granted no deduction.

[8] The appellant submits that the trial judge erred by applying inconsistent standards when reviewing the evidence and determining the value of the parties’ date of marriage assets. She argues that the trial judge held her to a more exacting standard while overlooking the weaknesses and gaps in the respondent’s evidence, and further submits that the respondent deserved less leniency because he was non-compliant in his disclosure obligations under the Family Law Rules, O. Reg. 114/99.

[9] We find no support for the appellant’s argument that the trial judge was uneven in his treatment of the evidence of the parties. The trial judge was not more lenient in his approach to the respondent’s 401K evidence compared with the appellant’s evidence on the land parcel. Importantly, the 401K was raised as a date of marriage asset at the time of summary judgment while the land parcel was not. The respondent, for example, provided the trial judge with evidence of the 401K’s value in 2016 and evidence of the annual rate of return since 2008. Finding that no contributions had been made after 2003, the trial judge ascribed the 401K a date of marriage value of $65,000, which was nearly half the respondent’s suggested value for the deduction. On the other hand, when later asked to consider the appellant’s land parcel as a date of marriage asset, the trial judge noted that there was no evidence of the particulars of the property, such as the specific location or size, and that there was “no evidentiary basis” for the value of the land on the date of marriage. It was open to the trial judge to reject the claim where there was insufficient evidence.

[10] We also see no basis to interfere with the trial judge’s conclusion that, because the property was “acquired” by inheritance by the appellant prior to the marriage, the proceeds did not qualify for exclusion. Finally, we find no error in the trial judge’s refusal to consider the appellant’s alternative argument. The trial judge was in the best position to decide whether, at the expense of finality, fairness dictated that the trial be reopened. The appellant has not pointed to an error that would warrant interference by this court in the trial judge’s exercise of discretion. We reject this ground of appeal.

Parochial School

[11] When deciding the issue of s. 7 expenses, the trial judge assessed each party’s share of the costs of parochial school for both children. In determining his share, the respondent argued that the appellant was able to claim a $10,000 childcare expense deduction as well as a charitable donation credit in previous tax years. The respondent argued that, in light of these tax benefits, the appellant’s after-tax cost of the parochial school was $34,423 rather than $59,650, as claimed. The appellant argued that the respondent should have raised this issue earlier and disputed the extent of the tax benefit. The trial judge ruled that the estimate of a 40-50 percent tax benefit was reasonable given the appellant’s income since 2016 and accepted the respondent’s calculations for his share of the parochial school expenses.

[12] The appellant raised this issue again during the July teleconference and sought to provide additional evidence to support her calculations. However, the trial judge ruled that the evidence could have been provided before the hearing, and in any case, would be unlikely to change the result. The trial judge noted that this was essentially an argument that the appellant did not have sufficient time to respond to the respondent’s May 20, 2020 reply affidavit before the summary judgment motion was heard on May 23 and May 25, 2020. However, that “position was not advanced that time nor did the [appellant] seek additional time to respond.” Therefore, he dismissed the appellant’s “request for reconsideration of this issue.”

[13] We see nothing in this ground of appeal. The trial judge quite properly considered any income tax deductions, credits, and benefits in determining the amount of the s. 7 expense and, for the reasons outlined above, we again see no basis to interfere with the trial judge’s exercise of discretion in refusing to reopen the trial to hear further evidence that could have been called during the hearing in May.

Prejudgment Interest

[14] After determining the amounts owing to the appellant, the trial judge concluded that prejudgment interest would not be granted on the equalization payment and the arrears in child table support. Other than stating that he declined to make an award of prejudgment interest, he gave no specific reasons for that decision.

[15] The appellant argues that the trial judge erred because he did not provide reasons, notwithstanding a legislative presumption in favour of awarding prejudgment interest and the appellant’s detailed submissions on the issue.

[16] As a general rule, a payor spouse is required to pay prejudgment interest on an equalization payment owing to the payee spouse. However, the applicable legislation makes clear that the granting or denial of prejudgment interest is discretionary: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 130. There are exceptions to the general rule. Exceptions arise “where, for various reasons, the payor spouse cannot realize on the asset giving rise to the equalization payment until after the trial, does not have the use of it prior to trial, the asset generates no income, and the payor spouse has not delayed the case being brought to trial”: Burgess v. Burgess (1995), 24 O.R. (3d) 547 (C.A.), at p. 552; Fielding v. Fielding, 2015 ONCA 901, 129 O.R. (3d) 65, at para. 43.

[17] Although the trial judge did not provide reasons for his decision not to award prejudgment interest, in this case the trial judge made findings that support his refusal to award prejudgment interest. The major asset identified at trial was the matrimonial home. The trial judge specifically found that there was no evidence that the respondent obtained any financial benefit, as joint owner of the home, in having the appellant continue to reside in the matrimonial home and pay its carrying costs for more than three years following the separation. He further noted that the appellant chose to remain in the matrimonial home and incur its carrying costs rather than seek an order for its sale.

[18] These findings firmly support the decision not to award prejudgment interest on the equalization payment. Although reasons for declining to award prejudgment interest should generally be provided, we see no basis to interfere with the trial judge’s ultimate decision.

[19] Nor do we see any error in the trial judge’s decision not to award prejudgment interest on the child support arrears. The trial judge recognized that the respondent did make efforts to make several payments of child support in the amount of $30,456 post-separation and that the respondent agreed to pay more than his proportionate share of some of the s. 7 expenses. Indeed, the trial judge observed that the respondent agreed to pay for certain s. 7 expenses that the trial judge would not otherwise have ordered. Again, these factors supported the trial judge’s decision not to grant prejudgment interest for child support in this case.

Conclusion

[20] For these reasons, the appeal is dismissed.

[21] In accordance with the agreement of counsel at the oral hearing, the respondent is entitled to his costs of the appeal in the amount of $10,000, all-inclusive of disbursements and taxes.

“P. Lauwers J.A.”

“S. Coroza J.A.”

“L. Sossin J.A.”